Esperion sees clear FDA path for heart drug

March 20, 2017

Esperion Therapeutics, a small biotech company that is trying to develop a new cholesterol drug, has a salve for its investors this morning: it says the Food and Drug Administration has agreed that the company’s medicine, bempadoic acid, could be approved based on blood test results, before a larger study proving it prevents heart attacks, strokes, heart procedures or deaths has been completed. Esperion said last June that the FDA might not approve the drug until after the largest study was done.

That should be a positive surprise for shareholders, who were stunned in a bad way on Friday, when Esperion’s shares dropped 20% because Amgen’s cholesterol drug, Repatha, did less well at preventing heart problems than analysts at investment banks had forecast it would. Investors read across to Esperion, its ongoing trials, and the sales potential of its drug.

Heart researchers have become more skeptical of using cholesterol tests alone to evaluate drugs because several drugs that lowered low density lipoprotein — LDL, the ‘bad cholesterol’– failed to have any effect on heart attacks, strokes, or even procedures used to open or bypass clogged arteries. Pfizer, Roche, and Eli Lilly all saw big efforts to develop drugs called CETP inhibitors fail for this reason, though the drugs cut LDL, among other effects. More surprisingly, prescription niacin, a drug cardiologists had used to lower cholesterol for decades, failed to reduce heart problems or strokes in large studies.

Investors should always be skeptical when a company says that the FDA said something nice. Communications between the FDA and companies are confidential; the FDA never tells its side of the story. Esperion acknowledges it doesn’t have a formal agreement, known as a special protocol assessment, on its cholesterol studies. But a company spokesman says that Esperion does have the written meeting minutes from its communication with the FDA. In the past, companies have had to change their public interpretation of FDA meetings when they told investors about meetings without getting the FDA’s written minutes.

But there’s another factor worth considering Esperion’s stock swoon Friday: it may not make much sense. If investors were selling off after shares tripled from $10 to $30 ahead of Amgen data, well, fair enough. It’s also fair enough if investors are just abandoning heart drugs because of their shoddy sales performance. Repatha has flopped so far, and so has Entresto, a much-hyped heart failure drug from Novartis, and nobody seems to quite understand why what used to be the drug industry’s biggest market has suddenly become infertile. Esperion also has a rocky history with investors.

But the Amgen data had little negative read-through to what will happen with Esperion’s drug. The one factor that does matter: Amgen’s Repatha underperformed in part because it had no effect on heart hospitalizations. Cardiologists say that because of new, better blood tests, people hospitalized for chest pain are now more likely to have GI distress or other problems unrelated to heart disease. So cholesterol drugs have no effect, washing out positive results. Tim Mayleben, Esperion’s chief executive, says that Esperion still has plenty of time to change the goal of its study, something many companies with heart drugs will probably be doing.

Esperion will also have another advantage over Amgen’s drug, which has a list price of more than $14,000: it will be a lot cheaper, comparable, Esperion says, to traditional cholesterol pills. And, unlike Amgen’s injectable Repatha, Esperion’s drug is a pill. Esperion’s study will also be composed of people with much higher cholesterol levels than the Amgen study, recruiting people who can’t get their cholesterol down with existing drugs either because the medicines don’t work well for them or they can’t tolerate a high enough dose. That could mean a bigger treatment effect per unit of LDL lowering. Esperion’s drug lowers cholesterol. Similar arguments could be made for The Medicines Company, which also saw its shares sink Friday because it is developing a cholesterol drug.

Esperion’s initial approval would be in patients with high cardiovascular risk, particularly those with established coronary artery disease or familial hypercholesterolemia, a genetic disease that causes high cholesterol levels. If a study showed the drug reduced heart problems, that approval could be expanded. Esperion’s cholesterol-lowering studies are expected to finish by 2019, and its study on heart problems and strokes by 2021. Those long timelines are likely to make investors shrug, but Esperion shares have one other thing going for them: at $533 million, Esperion’s market capitalization doesn’t price in much success at all.